Wall Street slides on economic fear

NEW YORK (Reuters) - Stocks slid on Thursday as investors feared that government efforts may not be enough to revive the economy and stabilize banks, overshadowing a surprise rise in January retail sales.

Although Congress prepared to pass as early as Thursday a $789 billion economic stimulus package, uncertainty about the economy fueled selling across broad range of sectors, including the energy sector that buckled as oil prices slid.

Both Exxon Mobil and Chevron declined more than 2 percent.

Financial shares dragged on the broader market, with the KBW Bank index off more than 5 percent, due to persistent worry about a lack of clarity over how the Obama administration would cleanse toxic assets from the bank's books.

"No one believes the retail sales data and everyone fears the trend of initial jobless claims will just continue to rise and rise and put more and more pressure on the psyche of consumers, which is already pretty fragile," said Jeff Kleintop, chief market strategist at LPL Financial in Boston.

The Dow Jones industrial average shed 183.98 points, or 2.32 percent, to 7,755.55. The Standard & Poor's 500 Index lost 19.36 points, or 2.32 percent, to 814.38. The Nasdaq Composite Index declined 24.98 points, or 1.63 percent, to 1,505.52.

The declines threatened to push the market back to its November bear market low, since which the S&P 500 is up 8 percent. It started 2009 up more than 20 percent from that significant low.

U.S. front-month crude dropped 4 percent, or $1.49, to $34.46 a barrel due to signs that faltering economies would crimp energy demands.

JPMorgan slid 6.2 percent to $24.49, while Citigroup tumbled almost 6 percent to $3.48. Wells Fargo dropped 7.1 percent to $16.23, while shares of Bank of America declined almost 7 percent to $5.66.

On Nasdaq, Microsoft Corp ranked as a top drag, down 2.5 percent to $18.74.

Government data showing that the number of people staying on unemployment benefits after drawing an initial week of aid hit a record in the last week of January, which underscored the toll of the 14-month-old recession on the labor market.

Bright spots included Coca-Cola Co , up more than 4 percent at $43.05, after posting a solid quarterly profit.

However, Aetna Inc dropped more than 2 percent to $31.33 after the health insurer posted a 57 percent drop in quarterly profit.

(Additional reporting by Leah Schnurr, Editing by Tom Hals)